Oil futures edged lower Tuesday, as investors awaited a meeting of major oil producers and continued to track tensions over Ukraine.
The Organization of the Petroleum Exporting Countries and its Russian-led allies, a group known as OPEC+, will meet this week. “While there is a consensus expectation that the group will maintain status quo and extend gradual production increases through March, any comments around their longer-term view can trigger large swings in the market,” said Robbie Fraser, global research & analytics manager at Schneider Electric, in a daily note.
“Similarly, the actual production levels of different members relative to their target should be especially scrutinized in the coming months,” he said.
“Ultimately OPEC+ could again be challenged by individual members cheating [versus] quotas — something that is typically a major issue that the group has largely avoided during this round of cuts,” said Fraser.
West Texas Intermediate crude for March delivery CL.1, +0.31% CL00, +0.31% CLH22, +0.31% fell 27 cents, or 0.3%, to $87.88 a barrel on the New York Mercantile Exchange. April Brent crude BRN00, +0.38% BRNJ22, +0.38%, the global benchmark, was down 22 cents, or 0.3%, at $89.04 a barrel on ICE Futures Europe.
Read: Why OPEC+ may not want $100 oil prices
OPEC+ has so far stuck to a timetable that has seen it add 400,000 barrels a day to output in monthly increments, resisting calls by the U.S. and oil-consuming countries for larger increases. Members, meanwhile, have struggled to meet the increased quotas.
“OPEC is still unable to implement the agreed expansion of production,” said Carsten Fritsch, analyst at Commerzbank, in a note
Citing data from a Reuters survey, he noted that output from the 10 OPEC members subject to production quotas rose by 230,000 barrels a day in January, falling short of the 250,000 barrels-a-day rise that had been agreed.
The U.S. and Russia exchanged sharp accusations against each other over Ukraine at a meeting of the U.N. Security Council on Monday. On Tuesday, Russian officials denied reports that Moscow had sent Washington a written response to a U.S. proposal aimed at de-escalating the crisis over Ukraine.
Russia has massed around 100,000 troops near its border with Ukraine and taken other actions that have sparked fears an invasion of the neighboring country may be imminent. The U.S. and its allies have threatened harsh sanctions against Moscow in the event of an attack. Russia has insisted that NATO rule out membership for Ukraine and has made other security demands that the U.S. and its allies have deemed nonstarters.
In other Nymex energy trading Tuesday, March gasoline RBH22, +0.78% added 0.1% to $2.558 a gallon, while March heating oil HOH22, +0.54% added nearly 0.1% to $2.717 a gallon.
March natural gas NGH22, -2.20% declined by 2.5% to $4.753 per million British thermal units, after posting a gain of 5.1% on Monday.